Shaw to keep Wind’s current strategy in place: exec

As it takes ownership of Wind Mobile, Shaw Communications Inc. will continue positioning Wind as a cheaper option compared to the big three national wireless carriers, according to the company’s chief operating officer. In a wide-ranging phone interview with The Wire Report, Jay Mehr said Shaw plans to keep the same “strategy that Wind has been executing over the course of last year.” That means Shaw will keep prices similar to their current levels instead of raising them to match the offerings from BCE Inc., Telus Corp. and Rogers Communications Inc., he confirmed. “I think there’s a pricing umbrella for us to be in that will save Canadians money, and I think you’ll see us stay underneath the big three in terms of pricing in the short term,” he said. He noted that in the medium term, “in addition to offering in the value space, you may see us compete more aggressively in the premium space, but those strategies aren’t fully baked and are probably for another day.” “Today you’re going to see us continue on the path we’re currently on,” he said. 3Macs telecom analyst Troy Crandall said in a phone interview that Wind’s current network is “mediocre” and that it will have to make improvements in order to raise prices. Shaw customers are used to a certain quality of service when it comes to their Internet, TV and home phone offerings, he said. “Suddenly, if you start giving them in their bundle really poor wireless service, that could really hurt you more than help you,” Crandall noted. “So to really be careful and it's going to take a lot of investment to get Wind’s network up to snuff, so to speak.” Crandall said that he expects the acquisition to have little effect on the market in 2016, while Aravinda Galappathige, a telecom analyst with Canaccord Genuity, said in a phone interview that he doesn’t expect there to be a noticeable effect on competition in the industry until 2017. Galappathige said that while he expects Wind to raise prices, his best guess is “they’ll probably be $15 south of where the incumbents are” and that he doesn’t expect prices to be at the same level as the incumbents “for a long time.” Wind’s website offers a $25 talk and text plan and a $40 plan with unlimited Canada-wide calling and texting and unlimited data, though customers only have access to full speeds for the first 3 GB. A $50 plan includes U.S. roaming and unlimited data with an 8 GB full-speed allotment. In the three provinces where Wind operates, Rogers’s talk and text plans range from $35 to $45, while Bell's and Telus’s are $35 to $60, according to company websites. Rogers says the most popular options for its Share Everything plans with no device subsidy are 2.5 GB for $85 and 5 GB for $100 with local calling. Adding Canada-wide calling is $5 extra a month. Bell’s website says its most popular plan is $85 for unlimited local calling and texting and 2.5 GB of data for "lite" devices, or select and second-generation smartphones. It also has a $5 option for unlimited Canada-wide calling. Telus’s “suggested pick” for second-tier smartphones is $90 for unlimited Canada-wide calling and 2.5 GB of data. All three companies offer more expensive plans for customers who want newer and more expensive phones, like Apple Inc.’s iPhone 6 and Samsung Electronics Co. Ltd.'s Galaxy 6. Shaw will only have pricing power once the company invests “a lot of money to improve the product,” Crandall added. “If you don’t have the quality you can’t compete on the price.” Wind recently wrapped up network improvements in Vancouver and is starting similar work in Calgary. Those improvements aren’t part of a separate upgrade to LTE. Mehr said the company is “currently doing a bunch of prep work for our LTE build and we’ll be rolling that out as we get through this calendar year,” but he declined to share the dates by which the company would like to see that completed. “Obviously, we’re very excited about all the spectrum assets and the opportunity to build an LTE network and the things that might happen with roaming rates and some of the things that are made possible to facilitate a fourth player in Ontario, Alberta and B.C.,” he said. “And so we’ll be investing heavily in terms of those next-generation services.” Shaw is in the process of selling its media division to Corus Entertainment Inc. for $2.65 billion, and plans to pay $1.6 billion for Wind. Mehr declined to comment on Shaw’s interest in buying Quebecor Inc.’s 700 MHz holdings, which are now for sale following its decision not to deploy the spectrum. “Not much to say there. It’s clear we are committed to the wireless business and are interested in all the aspects of that, but you can get yourself into a game of 3D chess if you’re trying to think through all those scenarios,” he said. Quebecor paid $233.3 million for the 700 MHz spectrum in British Columbia, Alberta and southern Ontario in 2014, taking advantage of rules imposed by Industry Canada that limited the amount of spectrum that could be purchased by the big three. When Wind withdrew from that auction, analysts said a lack of 700 MHz spectrum would hurt the company’s ability to compete going forward. That spectrum, former industry minister James Moore noted when he announced the auction results, is particularly valuable to wireless companies because it carries signals longer distances, requires fewer cell towers and is able to penetrate barriers like building walls, elevators and underground parking lots. Mehr agreed that the upcoming 600 MHz auction is “quite important” for the company given its lack of 700 MHz spectrum. Gregory Taylor, an assistant professor of mass communications at the University of Calgary, told The Wire Report last year that 600 MHz was “beachfront” spectrum, like the 700 MHz. When asked about whether Shaw will integrate its WiFi network with its new wireless assets – perhaps by offering WiFi calling – Mehr responded that “if you think about the set of assets that Shaw now owns, and that if… all of our transactions are approved… I think there’s some really wicked, innovative ways those assets could come together.” He added: “I don’t know that it’s healthy for me to speculate on the go-to-markets at this point… I think if you look across the range of assets that we have in terms of network connectivity, in terms of video, in terms of voice, in terms of cloud – boy, there could be some really interesting and innovative stuff here, and we’re certainly working hard on all of that.” In response to a question about whether the company has plans to expand beyond its current operating territory of Ontario, Alberta and B.C., Mehr said that the areas where Wind currently holds 50 MHz of spectrum covers “by far the vast majority of Canadians, and that’s a lot to do.” “Wind doesn’t currently serve everywhere that they have the spectrum, so if we look at fully exploiting the spectrum opportunities that exist today and taking on the big three in all of those markets, man, that’s a lot,” he said. “So I think we’re going to focus there for now.” A Shaw spokesman said in a follow-up email that Wind has 50Mhz in the Toronto area, as well as Edmonton, Calgary and Vancouver but additional spectrum outside those cores, and that the company would expand wireless service “where it makes sense given our cable footprint,” that is, in Alberta and B.C. The company expects the deal to close in the third quarter, Mehr said. CORRECTION: Previous versions of this story incorrectly attributed the additional information emailed by Shaw and the information about the company's expectations regarding the timeline to close the deal. — With reporting by Shruti Shekar at sshekar@thewirereport.ca and Anja Karadeglija at akarad@thewirereport.ca and editing by Charelle Evelyn at cevelyn@thewirereport.ca

Shaw to keep Wind’s current strategy in place: exec

News | February 9, 2016

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Shaw to keep Wind’s current strategy in place: exec

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